Iron ore prices jump

Chinese iron ore production fell to 65.5 million tonnes last month, the smallest amount during a non-winter period since 2008. Chinese mines generally produce cheaper, lower quality iron ore, than major seaborne producers.

Iron ore futures may have also been supported by the release of Chinese production figures for June, revealing iron ore output fell to 65.5 million tonnes in June, the weakest level during a non-winter month since 2008.

Thomson Reuters

As is evident in the price discount for lower grades compared to mid-and-higher grades at present, China’s desire for blue skies is seeing mills favour more efficient higher grades, especially at a time when steel prices and operating margins are elevated.

That’s weighing not only on the price for lower grades but also Chinese iron ore output given the quality of its ore is well below that of major seaborne producers from Brazil and Australia.